Tax Cuts and Jobs Act Eliminates Certain Mileage Rates
Taxpayers are set to see a change to standard mileage rates due to the suspension of the miscellaneous itemized deduction under code § 67 for unreimbursed employee business expenses and deductions for moving expenses under code § 217 from 2018 to 2025 outlined in the Tax Cuts and Jobs Act (TCJA). According to the notice issued by the IRS, the standard mileage rates will not apply to unreimbursed employee expenses and moving expense purposes. That being said, there are always exceptions to the rule …
Standard Mileage Rate
While miscellaneous itemized deductions for unreimbursed employee business expenses will be axed between 2018 to 2025 under the TCJA, members in certain performing arts positions (state or local government representatives who are paid based on fees or members of the U.S. armed forces) will be allowed to deduct mileage expenses as an above-the-line deduction on their Individual Income Tax Return (line 24 of Form 1040). Using this treatment, eligible taxpayers may continue to use the business standard mileage rate of 54.5 cents per mile.
Moving Expense Rate
The rate for moving expenses also underwent a drastic change. The TCJA will repeal the moving expense deduction for individual taxpayers from 2018 to 2025 despite language in Notice 2018-03 declaring the 2018 rate to be 18 cents per mile. However, similar to the standard mileage rate changes, exceptions will be made for active members of the U.S. Armed Forces who incur moving expenses as a result of military order.
Employer Mileage Reimbursement Programs
Finally, the TCJA has altered the depreciation allowances for passenger automobiles. As a result, the maximum standard cost under a fixed-and-variable-rate (FAVR) plan has increased. Prior to the TCJA, under a FAVR plan the maximum standard automobile cost was $27,300 for 2018 and $31,000 for trucks and vans. Now, with the TCJA in full effect, the maximum standard automobile cost for these vehicles is now $50,000 for passenger vehicles (including trucks and vans). Furthermore, unlike many of the other provisions outlined in the TCJA, this particular increase is permanent.
Do you know how to get the most tax savings from your vehicles? Email Rea & Associates and start driving your tax strategy forward.
By Jason Martin, CPA (Dublin office)